Abstract:
Small and Medium Enterprises (SMEs) are prevalent across the
Japanese economy, accounting for the lion‘s share of its GDP. Their
importance is indicated not only by the large share of GDP, but also
by the number of companies, total number of employees, and value
of shipments etc. However, since last two decades, this sector has no
longer been a thriving source of growth. The business failure rate
remains high while firm entry rate has slipped downward. One of the
reasons for high rate of business failures in SMEs is the lack of
attention they are paying to the Human Resource Management
(HRM) practices of their businesses when compared with their large
counter parts. Therefore, the broad aim of this study is to investigate
HRM practices in SMEs in Japan. Specifically, this study aims to
investigate whether HRM practices are significant predictors of
innovations in SMEs, as measured by the number of new products,
process and administrative developments which are crucial to face
global competition. Further, this study attempts to examine the
relationship between HRM practices and organizational innovations
shedding some light on the link between the two. A structured
questionnaire was developed and sent to 436 SMEs in Aichi
Prefecture and 144 firms responded to the questionnaire resulting in
32 per cent response rate. Based on the data analysis, it was found
that there is a strong positive relationship between HRM practices
and organizational innovations in manufacturing SMEs in Japan.
